LEASE PURCHASE vs. BONDING
| Cost Comparison Table |
| |
Lease Purchase |
Bonding |
| A. Immediate availability of equipment cost? |
YES |
NO |
| B. Flexibility: |
|
|
1. Payments tailored to budget limitation and equipment useful life? |
YES |
NO |
| |
For varying lease terms for particular items of
equipment and as required by the municipality. |
In many cases, limited terms for departmental equipment. |
2. Rates set in advance?
|
YES |
NO |
| |
Rate firms from date of award until equipment acceptance by the municipality. |
Rate set on day of closing. |
| C. Debt Obligation? |
NO |
YES |
| D. Additional direct costs: |
1. Financial advisor
|
NO |
YES |
2. Bond counsel
|
NO |
YES |
3. Accountant
|
NO |
YES |
4. Escrow agent fee
|
NO |
YES |
5. Trustee fees
|
NO |
YES |
6. Printing
|
NO |
YES |
7. Rating Agency
|
NO |
YES |
8. Underwriter's discount
|
NO |
YES |
| |
| In addition, indirect costs of bonding include 1) the amount
of time spent by municipal officials working on the bond itself and 2) the higher
cost of equipment as a result of potential delays in the bonding process. |
|
|
